March saw the highest number of monthly business liquidations in nine years with construction companies leading the way, credit bureau Centrix says.
Centrix's April Credit Indicator shows 238 liquidations in March, the most for any month since 299 in March 2015.
"The tough economic climate continues to impact Kiwi businesses across the country. In March 2024, defaults climbed across all sectors except for hospitality," Centrix says.
March liquidations included 56 construction companies.
Centrix attributes the rising number of construction company liquidations to high interest rates and weak demand continuing to impact the pipeline of work for both home renovations and new builds.
Centrix says 122, or 25%, of companies liquidated during the March quarter were from the construction sector.
There were 486 construction company liquidations during the March 2024 year. That compares to 415 in the March 2023 year, and 262 in the March 2022 year.
"Liquidations were up across the board, with retail trade (+57%), transport (+43%) and the property/rental sectors (+20%) hit the hardest.
There were over 230 companies placed into liquidation during March 2024, the highest monthly total recorded since March 2015," says Centrix in its April Credit Indicator.
13 Comments
Quite sad, many families have put their life savings into them..
Yes high interest rates and weak demand. Also the crazy inflation of construction input costs over the past 2-3 years.
If they think it’s bad now, wait till late 2024
I just got quoted:
- $80k+ fittings for a basic bathroom + ensuite upgrade
- $70k for a very modest kitchen
We'll make do for another year or two...
Had a modest kitchen upgrade May2019 for a medium sized kitchen OD 3.1m x 3.78 incl keeping the existing pantry, but no Ovens/stoves/hobs, fridge/freezers/ or dishwasher. ~$20k wih some additional electrics. Of course if it includes a marble or engineered material bench top costing a 5k -10k and all the whiteware as well, so yes $70k could be the price. Perhaps another quote would confirm.
I'm sure it wouldn't fit your particular requirements, but a couple of years back friends of ours got some quotes to add a room extension to their house to give the family more room and space for visitors. Ended up ditching that idea and buying an RV. So a fully self contained space for visitors, something to use for family road trips and can be liquidated in the future (which a spare room could not).
Personally don't have the space to park one, but love the idea!
How many quotes?
Just got another quote for each. The kitchen one was about the same (slightly different spec based on what the company does, but comparable). The second bathroom quote was ~$60k - though they seem like a much less organised / more cowboyish operation. We'll get another couple of data points for each then make a call...
In reality there should be a lot more coming the IRD and government handouts through 2022-2022 saved far too many low profit/zombie companies from going bust much earlier. I suspect a lot of this year will be catch-up + a higher than normal number of liquidations - result? Post GFC records incoming for each month.
if the building company gone bust, are those master building guarantee from those company still valid?
Many of those new buildings usually have them.
Definitely something that you should talk to your lawyer about so you know before signing
Don't believe the Master Build guarantee is worth the paper it's written on.
I'm sure there are many hospitality companies specifically cafes, restaurants and bars that were marginal even before covids. Managed to keep their heads above water during Covids but can now no longer trade profitably because of people pulling in their belts. Unfortunate but that's the way things work. In any event 25% could go by the board and there'd still be plenty of choice.
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